Uganda's leading dairy processor Pearl Dairy Farms has secured $35 million in debt financing to fund its expansion across the region, in a deal that highlights the growing interest in Africa's agricultural sector.
The financing, arranged by advisory firm Delphos, comes from the International Finance Corporation (IFC) and the Dutch development bank FMO. It will be used to upgrade and increase capacity at Pearl Dairy's powdered milk plant in Uganda and to acquire a packing facility in Kenya.
This expansion is expected to have a significant impact on the dairy value chain in both countries. Pearl Dairy plans to implement a Dairy Development Program, supported by the IFC, which aims to benefit over 15,000 local farmers by providing training on best practices and access to data to boost productivity and profitability.
Mr Amit Sagar, CEO of Pearl Dairy Farms, described the financing as "an important milestone" that would allow the company to "scale our impact even further, empowering more smallholder farmers, enhancing food security, and fostering sustainable growth."
The deal underscores the importance of Uganda's agricultural sector, which employs approximately 72% of the population and contributes about 24.1% to the country's GDP. Uganda's dairy sector is now valued at $3.8 billion, with exports bringing in $106.2 million annually.
Bart Turtelboom, Chairman and CEO of Delphos, highlighted the potential for inclusive growth in the sector, stating that "investment in modernizing the dairy value chain creates significant economic returns for the community and the country as a whole."
This transaction adds to the $4.7 billion in financing that Delphos has raised for projects across Africa over the past 37 years, contributing to the UN's Sustainable Development Goal 2 of alleviating hunger in emerging economies.
The investment in Pearl Dairy Farms comes at a time when food security is increasingly in focus, with milk and dairy products seen as crucial in combating hunger and malnutrition. The expansion is expected to increase access to dairy products and strengthen the supply chain's resilience to macroeconomic shocks in the region.
